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Telematics in commercial lines: viable but unscalable

#insurancetelematics
POSTED ON:
October 07, 2021
TAGS:
Insurance telematics,
open mobility, insurtech, data harmonization
Three weeks ago, we wrote a post inspired by Matteo Carbone. There, we discussed why telematics hadn’t worked in many cases and why it had been a success when properly cooked. Fortunately, good “cooks” emerge every day, but there’s no way they can feed a crowd. For those tired of food associations, our statement is:

Implementing telematics is no longer the biggest problem. Scaling is.

What’s the big deal?
You must have heard all this buzz around connected cars, data-driven insurance services, the role of telematics in insurance. Glad you’ve noticed it, as this noise has been driving us crazy for the past ten years – ever since telematics fit for motor insurers became obvious.

Telematics penetrated almost every business domain, and the technology is mature enough, but somehow it steers clear of insurance. There should be a grave cause!

The relations between telematics and insurance are just like between men and women – if they seem perfect for the general public, prepare for pitfalls and extremities on closer acquaintance.

That’s what happened ten years ago when telematics proved to be a perfect fit for motor insurance.

The technology could provide data for insurers to better understand the risk they take, the actual reasons for claims, and, most importantly, take actions to reduce the risk. Practically, it could be the insurers’ X-ray, unveiling all possible risks and offering an extensive anamnesis to mitigate them.

But imagine there’s no universal X-Ray in the hospital – they need to buy separate X-Ray units for children, blondes, singers, hipsters, and other groups of people. I bet the hospital can’t afford them all and will have to choose a few to buy (hope, not the one for hipsters).

The same happened with telematics and insurance.

As telematics was the land of fleet management, insurers started reusing fleet management solutions for their purposes. Back then, a fleet management solution comprised of some proprietary system and captive hardware. These solutions were developed and distributed by local small and mid-range telematics providers, while insurers only used the tools available in their regions.

In such a setting, telematics insurance markets were limited unless an insurer tried to cooperate with multiple service providers, which was a nightmare. Realizing that, some insurers started investing in their own telematics devices and captive software to cover a small group of vehicles. But this added complexity with device logistics and installations, device management, etc.

Telematics insurance was not as mature as fleet management. Featuring the same efficiency telematics insurance was delivered semi-professionally – mainly by insurance specialists. And its value was not as evident as in the case of fleet management.

Many claimed that telematics was a poor value for the money, especially with the high cost of the HW on a scale.

In such cases, the first intention people have is to cut the cost of ownership. And this intention gave birth to hundreds of in-house, low-cost, experimental, or other telematics solutions and initiatives.

It started 10 years ago.

Today, when the technologies are far more advanced, the value of telematics insurance solutions and data is clear. Moreover, telematics is far more affordable. But one thing remains unchanged – there’s a roadblock on the highway to data-based insurance.

The fragmented market of telematics data sources, solutions, and technologies block the road. And the worst thing is that WE ALL created such diversity while struggling to adopt telematics within the past ten years. See what we have now:

- Hundreds of local and international telematics service providers with their hardware+software combinations;
- A gazillion of mobile tracking solutions;
- Thousands of tracking devices;
- OEM data from a dozen of car manufacturers;
- Integrators, aggregators, and mobility services on top of it.

To offer telematics to all their clients, insurers have to approach each data provider individually and find a specific way to retrieve telematics data. But considering the industry dynamics and the growing number of vendors – 1000+ just in the US – it becomes impossible to build scalable telematics-based insurance solutions on top of this fragmented landscape.

Remember thousands of X-Ray units, each fitting only a certain group of people? That’s it. No hospital can afford it.

And this problem is the last step that separates us from diving into the open mobility ecosystem, and it's exactly why Draivn appeared.

The platform solves the issue of data fragmentation and helps insurance companies build scalable telematics-based products for their B2B and B2B2C customers. Draivn relieves insurers from digging into the complexity of multi-source data access, harmonization, and analytics.

Moreover, if a data owner has already invested in the hardware infrastructure, this data can become a part of the ecosystem. It can be shared with other consumers (e.g., maintenance) to enable even more data-driven services.

Whatever direction the market takes, whatever platform your fleet customer decides to utilize, Draivn delivers a future-proof solution, which helps insurers secure their telematics investments.

Telematics is becoming a standard in B2C. Bet we will see the same trend in B2B and B2B2C very soon. And given the fact that commercial lines will dominate this market, it is the right time to start building a new mobility ecosystem. Let’s do it together.
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